I am no fan of the ‘Occupy Wall Street’ movement, which one or two libertarians not with standing, is a gathering of the ‘usual suspects’ on the reactionary left. That said the one virtue of this so-called ‘movement’ has been the attention it has focused on ‘structured inequality’. Most people do not care about the massive inequality between J.K Rowling or the late Steve Jobs and themselves or your average street cleaner but they do care that there may be a self-perpetuating elite (especially in the banking sector) which disproportionately influences the political system and reproduces the current power structure.
Broadly speaking there are two views on how to deal with this inequality. The OWS brigade along with the more mainstream left believe that greater regulation, more political control of markets and higher taxes on the wealthy will rebalance the system, breaking up the existing power structure. They fail miserably however to explain why the wealthy won’t use their current power to find ways of manipulating this increased intervention via continuous rent seeking. Adding yet more interventions and taxes which discourage the formation of new fortunes will simply provide additional opportunities for the current elite to avoid the ‘creative destruction’ characteristic of un-fettered market competition. The Classical Liberal/ Libertarian solution, by contrast, is to dis-empower the interventionist apparatus that enables the wealthy to shelter behind bail-outs and protective barriers of various sorts. Yet, Libertarians also fail to explain why those who benefit from the status quo would give up their privileges in order to return to a genuinely free market model.
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Dr Mark Pennington is the author of Robust Political Economy: Classical Liberalism and the Future of Public Policy.